Recession over by Christmas?

25 October 2009

Whether an act of desperation or confidence, it’s hard to fathom why Mr Brown has for all intents and purposes staked his (much diminished) political capital and personal reputation on the UK economy to recover by the end of the year. This is doubtless a very risky thing to do: there is a possibility that the economy continues to shrink.

Even if the economy ceases to shrink, this line of argument may not find resonance among the UK population. The danger for Mr Brown is the feel-bad factor that will inevitably remain strong among the population. The statistics may point to a recovery, but the question is whether ordinary Britons will be finding improvement in their personal situtation. Given how much economy has shrunk, it requires a pretty steep recovery to cancel out what has been lost. Indeed, for many people, job insecurity may increase. There are worries about the public debt and the currency, and even if GDP grows, people may feel poorer or less confident. So it is a dangerous gamble.